Forty-three years practicing law, Robert Keatinge, of counsel at Holland & Hart LLP and renowned expert in business law, is still having fun. He counsels clients on all stages of operations, teaches law, writes treatises and law review articles, delivers speeches, serves as a consulting or expert witness, and he still has time to pursue his passion—Shakespeare.
It’s a full life, by any standard. “I get to do interesting things with people I like and respect and, occasionally, make things a bit better,” he says. “Life is good.”
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What initially drew you to business law?
When I graduated from law school in 1973 and found myself doing a lot of different kinds of things. In those days, many lawyers were less specialized than we are today. The first matter I handled was a copyright question. I was also doing litigation, real estate, and a fair amount of bankruptcy practice, and I found I enjoyed the business issues related to that. I realized I needed to know more about business law and tax, which I have been doing ever since.
I think of the practice of law as having a couple of components. One is solving problems. The other is resolving or winning fights. I like business law because it’s much more focused on solving problems than it is winning fights.
Is there a stage of a company’s evolution that is most interesting to you and if so why?
When I initially went into practice I found organizing business organizations to be interesting because it afforded me the opportunity to help a client sit down and set up their own set of rules in terms of how they’re going to relate to each other. But as time has passed, I find that the latter stages of business organizations development can actually be more fun. The clients, having been in business for a while, are a good deal more sophisticated in their understanding of the potential issues that may come up, and they have a better understanding of what they’re really trying to accomplish.
At times, even the dissolution of a company can be particularly interesting, in terms of finding a way for the people who have put together a business to exit from the firm in such a way as to protect and to benefit them. It’s often a very interesting challenge for parties getting to the end of a firm whether it’s through an M&A transaction or through a bankruptcy to figure out what’s the most effective way for them to complete the life cycle of a business organization.
You recently spoke at the University of Texas Law: 25th Annual LLC, LPs and Partnership conference. You discussed the increasing use of the series LLC. What are the pros and cons of this form of company and why are people choosing it over other forms?
Series LLCs and to a lesser extent limited partnerships are perhaps getting more attention in terms of academic discussions than they are actually being used. But over the last four or five years, I’ve begun to see more and more entities and planners attempting to work series into their business plans. Series are the equivalent of divisions of a LLC, but have the benefit of being able to have what we refer to as cellular liability protection. For instance, an LLC could own two apartment buildings and put each one into a separate series. I think people like this as a way of kind of increasing the protection within a corporate entity.
Of course there are downsides. First of all, they’re new and have not been tested in the courts. People are somewhat reluctant to put all of their confidence in the series structure when in many cases you can accomplish the same thing using single member LLCs.
Nonetheless, people are finding them interesting and there’s a great deal of thinking and work going into developing series and also developing a set of tax rules that will apply to them.
Is the series LLC a new concept?
Approximately 10 years ago, series were added to the Delaware Limited Liability Company Act. People looked at them and originally thought of them as being used in the same sort of securitization transactions that they had been used with respect to business and statutory trust.
This is why business organization practice is a fun area to practice in: when an idea like series gets out there, lots of people start thinking about what they can do with it. So over the last 10 years people have been using series, for example, for the purpose of segregating liabilities between different assets such as the apartment buildings.
You’ve been a professor at the University of Denver Sturm College of Law, the University of Miami School of Law, and Suffolk University School of Law. What do you enjoy about teaching?
What I enjoy about teaching is much the same thing that I enjoy about working with the Business Law Section and writing. It’s an opportunity to both deepen and broaden my understanding of my area of practice. I’m a firm believer in the concept that one cannot understand something unless one can explain it. Being able to teach has helped me to pull together my knowledge. I’ve never taught a class where I haven’t felt that I have learned as much about what I’m teaching as most of the students have just because students can often be just terrifically incisive questioners.
You also taught in Budapest and I wanted you to talk about this experience.
Suffolk University runs a program with a law school in Budapest, Hungary, and I was given the opportunity to teach a two-week class on American business organizations. Many of the students in the school are experienced lawyers from all over the world—Europe, Africa, Asia, South America—who have practiced for years in civil law countries and want to learn more about various elements of common law jurisprudence. It was a fascinating experience, in terms of learning something about another country and having to explain the laws, and learn about the law in other parts of the world.
One of the things I found most fascinating about Budapest was meeting people whose families were divided between people who had come of age before the Berlin Wall fell and those members who came of age after the Wall fell. They had different experiences in terms of going to school or their first employment under the two quite different regimes. It reminded me that we live in a world that can change dramatically and the dramatic changes have profound effects on the people who are within it.
Was there something that you were discussing about U.S. law that was foreign to them? A new way of thinking?
This is an egregious oversimplification, but civil law tends to be far more statutorily based than our law. Our law has grown up through the common law via court decisions and the like. What was most amazing to me, as someone who has been practicing in the partnership area for pretty much my entire career, was the day that I was talking to a bunch of business lawyers from places as disparate as Switzerland to China, and I mentioned the importance of fiduciary relationships and common law agency to the underpinning of partnerships and LLCs.
I quickly came to realize that this was a very different concept of how the relationship of owners and of owners and management is controlled, because what most of them were used to was something that was far more statutorily mandated. They would look at statutes and regulations to determine the duties of people, whereas we would often resort to the learning of the Chancery report in Delaware and the highest appellate court in various jurisdictions here. But we are now starting to see something of a common law flavor in Hungary.
You co-authored two treaties, one was the Choice of Entity and the other Limited Liability Companies. What do you enjoy about this work?
What I enjoy about writing is similar to what I enjoy about teaching in that it gives me an opportunity to see if I can develop an understanding and can express that understanding. I write about how the law is developing, what the flows are and, for example, if a particular legislative approach is adopted, how it would affect the choice of business organizations or the operation of limited liability companies.
You also serve as a consulting or testifying expert on business legal issue. What do you like about this work?
A testifying or even a consulting expert occupies a different place within the law than does a person who is acting as a planner, seeking to help a client attain their results, or acting as an advocate. A testifying expert and a consulting expert is more in the position of trying to explain the law and because the testimony I give is under oath, reflects my honest beliefs as to how the law interacts with the facts of a particular situation. What I ultimately get to do is develop a deeper understanding of the interrelationship of the law and a particular set of facts, organize that understand, and express that analysis in a manner that is comprehensible to a tribunal.
You recently gave a speech, “Dual Status: Employee versus Partner.” What were the main points of that speech?
This was a talk I have been speaking about since 1997. It’s how the federal tax law treats partners or employees for purposes of compensatory taxes like self-employment taxes and employee taxes on wages (SECA taxes) and taxes for social security and hospital insurance imposed on the employer and employee in connection with wages (FICA taxes). There has been a rule for many decades that a partner in a tax partnership cannot be an employee of the partnership. What that essentially says is that the partner is entirely treated under the net earnings from self-employment regime, which in some respect is a more burdensome tax concept than a shareholder who is also an employee of a corporation.
So the partner will often be taxed on his entire share of partnership profits, while an employee will only be subject to employment taxes on his wages. This disparity has been the subject of a number of regulatory projects and a couple of court cases and is still an area of confusion.
Again, the real answers to these questions have not been forthcoming from Congress or from the Treasury Department simply because the issues here are complex. While they have a profound effect on certain businesses, there has not been enough of a drive to actually come up with some clear answers. Ironically the distinction between a self-employed person, which is effectively how a partner is treated, and an employee are the subject of at least one of the proposals in the forthcoming Congress.
You also gave a speech, “Attorney for the Organization, Legal and Ethical Issue.” What are the main points?
It dealt with both in-house attorneys and lawyers who are in the position of representing a business firm or an association of some sort. Lawyers are often approached by more than one party and asked to put together a corporation or a partnership. There are some very difficult conflicts of interest that arise that the lawyer has to be aware of and to explain to his clients to make sure everybody understands what the lawyer’s role is. Perhaps the most obvious issue is when you’re talking to a manager of an organization, with regard to the manager’s obligations and duties—are you representing that manager or are you representing the organization?
One of the issues that arises from this relationship is if, for some reason, the control of the organization changes either in the event of a bankruptcy or change in ownership of the organization, the lawyers are often in a position of having to give up information that the lawyer conveyed to the particular officer, director to the organization which at that point maybe adverse to that officer or director.
If you were invited to give a speech on any topic what would you choose to talk about?
I really like this question because I actually had that opportunity in 2013 when I was invited to give a speech for something called the Gunderson Lecture at the University of South Dakota. The topic I chose to talk about was There is “No Right Answer to the Wrong Question.” What I have found, and I think it took me decades of practice for me to really understand this, is that as lawyers we are generally called upon to give answers, and very often the lawyer’s advice is not considered helpful because the lawyer is giving an absolutely accurate answer to a totally wrong question.
One of the benefits that we bring to our clients is to stop and say, “Why are you asking me this question?” When I’ve asked that, I’ve often come to understand what the client was actually trying to accomplish. I find myself in a position of “Well, let’s think through what the problem is you’re trying to solve.”
It’s a delicate skill. Certainly great seasoned lawyers are very good at it. Young lawyers are never really taught this.
What do you do for fun?
I am a true lover of Shakespeare and always have been. Last year I saw four different productions of Cymbeline (two different ones in London, one in Stratford upon Avon, and one in Boulder). Right now, I am enrolled in a Master’s Certificate Program at the University of Colorado called Applied Shakespeare. What this class is letting us do is plumb the depths of the number of Shakespearean plays, reading the history, reading the criticism, looking at the written word, understanding how the play evolved.
At the end of the class, we are going to have a two-week intensive with the Colorado Shakespeare Festival, where we’re going to participate in a way that I’m not sure even the professor knows yet, because this the first time this class is offered.
Anything else you’d like to add?
I know we’re living in difficult times and I was thinking about how could I express how appreciative I am to the Business Law Section, which has given me the opportunity to meet and work with really great business law leaders such as Alan Donn, Larry Ribstein, and Beth Miller, Marty Lubaroff, Alan Bromberg, and George Coleman. And my appreciation to my firm Holland & Hart, which has had absolutely astonishing patience with my going out and reading and speaking and writing and doing a lot of the things that I do. I thought about a quote that my wife and I heard delivered in Aruba: “I am too blessed to be stressed, distressed or depressed.” I get to do interesting things with people I like and respect and, occasionally make thing a bit better. Life is good.
Thank you so much!